How to fund care for the elderly – now

The “pay when you die” scheme is not to be introduced in 2015, so read on to
find out how to fund care now.

It may be years before the changes proposed in this week's White Paper on social care come into effect. Any attempt to "cap" the amount individuals spend on care is unlikely to be retrospective, so will be of limited use for those who need help with caring for elderly relatives today – or in the near future.

Many of these families will find they are still left to arrange care services themselves – and pay bear the brunt of the costs as well.

Negotiating your way through the care system can be a frustrating experience as people often have to deal with multiple agencies – such as GPs, social services, and local hospitals and nursing homes.

The following checklist provides useful information for families facing the prospect of finding suitable care for an elderly relative.

Anyone whose health is deteriorating can get their health needs assessed by their local authority. This should take place, before any financial assessment is made regarding their ability to pay for care. If the person is assessed as needing care – whether it is additional help in their own home, or in a nursing home, then you should be told the maximum amount the authority will pay per week towards this care. This should be based on their individual medical needs. They will then be financially assessed as to whether they have to contribute towards some or all of this cost.

Ask for NHS continuing care

If health needs are severe you may qualify for this NHS funding. This means all care costs will be met by the NHS, rather than the local authority. Families can ask to be reassessed for NHS continuing care if their relative's health deteriorates.

Claim the correct benefits

Those in a nursing home (as opposed to a residential home) should qualify for the Registered Nursing Care Contribution. This is not a means-tested benefit so is paid to those who are deemed "self-funders'" as well as those whose care costs are met in full by the local authority. The normal payment is £108.70 a week, this is usually paid directly to the nursing home and is offset against costs paid by the patient.

In addition self-funders may also be entitled to Attendance Allowance, worth up to £73.60 a week. Again this is not means-tested and recipients don't pay tax on this payment.

If a relative moves permanently into care they can't claim either housing or council tax benefit; however, these shouldn't be stopped if they are receiving temporary or respite care.

Seek Advice

More than 130,000 people move into care each year, and now more than half of them will pay at least part of their own fees. It is therefore imperative to seek advice on how best to use your assets to meet these costs. If you run out of funds, the local authority will then pick up the cost, but this may mean moving into cheaper accommodation that meets their funding criteria, which could be further away from relatives. Only 7pc of "self-funders" currently get financial advice. Contact the Society of Later Life Advisers on www.societyoflaterlifeadvisers.co.uk who can put you in touch with a local adviser who specialises in care fees planning.

Will your home count against you?

Those with assets of more than £23,250 will not get help towards care costs. In most cases, this figure will include the value of the family home. But there are certain circumstances in which it is disregarded – the most important being if a spouse, partner or relative aged 60 or over is living there. Likewise, the home should not be taken into account if your care needs are classified as "temporary".

Do you have to sell your home?

Those in this position (that is, their assets apart from the family home are less than £23,250) can request that a legal charge be put on their home. This means the local authority pays the costs and recoups them from the sale of the property at a later date – allowing a person's estate to benefit from any subsequent rise in property prices.

Consider a long-term care annuity

Rather than simply selling the home and using the proceeds to pay care fees, consider an annuity. These are expensive – and often can only be bought from the proceeds of a house sale. But they guarantee to pay a fixed monthly sum for life, which is tax free if paid directly to the nursing home. The main advantage of these annuities is that a person's capital won't "run out" – so you won't fall back on local authority funding at a later stage. The disadvantage is that could prove more expensive if a person dies shortly after going into care. Companies such as Partnership and Axa PPP sell these annuities; the exact price will depend on a person's age and health.